SHANGHAI: China stocks closed higher on Wednesday as investors took comfort in signs of lower domestic COVID-19 infections, while US President Joe Biden’s decision to consider eliminating Trump-era tariffs on Beijing further lifted risk appetite.
The blue-chip CSI300 index ended 1.4% higher at 3,976.42, while the Shanghai Composite Index gained 0.8% to 3,058.70 points.
The Hang Seng index rose 1% to 19,824.57, while the China Enterprises Index gained 1.7% to 6,769.72 points.
Shanghai said on Wednesday half the city had achieved “zero-COVID” status, but uncompromising restrictions had to remain in place under a national policy. Meanwhile, new cases detected in Beijing dropped to the lowest level since April 26.
The head of the World Health Organization said on Tuesday China’s zero-tolerance COVID-19 policy is not sustainable given what is now known of the virus.
“Over the past week, the COVID-19 situation has continued to improve at the national level,” said Nomura in a note. “However, the turning point for economic fundamentals and most financial assets in coming weeks (or months) depends mainly on Beijing’s stance on zero-COVID strategy instead of daily cases.” ** Lifting market sentiment further, China’s producer prices rose at the slowest pace in a year in April, despite the surge in global commodity costs, leaving room for more stimulus to shore up the flagging economy.
Risks affecting China’s onshore market are controllable, and the market has solid foundation for stable operation, the official CCTV reported on Tuesday, citing a securities regulatory official.
Biden, under pressure to tame high inflation, said he was considering eliminating Trump-era tariffs on China as a way to lower prices for goods in the United States.